2015 (10) TMI 1129 - AT - Central Excise

Denial of abatement claim - Surrender of registeraion - production of gutkha - Held that - In this case the Government of Chhattisgarh has banned the manufacture of tobacco products w.e.f. 26.07.2012. This ban on manufacture of tobacco was in public domain and appellant has also stopped manufacturing w.e.f. 26.07.2012 itself. Appellant has also intimated to the department for sealing of their machines w.e.f. 26.07.2012 and surrendered their registration certificate on 31.07.2012. It is a fact on record after that appellant has not started any manufacturing or requested for de-sealing of machines. In these circumstances, appellant has complied with condition of Rule 16 of the said rules and entitled for abetment of refund of duty paid for the period 27.07.2012 - 31.07.2012. - Decided in favour of assessee.

Summary

Issues:
Claim for abetment of excess duty paid due to factory closure from 27.07.2012 to 31.07.2012 under Rule 16 of Pan Masala Packing Machines Rules 2008.

Analysis:

Issue 1: Claim for Abetment of Excess Duty Paid
The appellant appealed against the denial of abetment for the period 27.07.2012 to 31.07.2012 by the Ld. Commissioner (A) due to the ban on manufacturing gutkha by the Government of Chhattisgarh. The appellant ceased production on 26.07.2012 and requested sealing of packing machines, surrendering their registration certificate on 31.07.2012. The appellant filed a refund claim for the closure period, which was initially sanctioned but later challenged by the Revenue. The Ld. Consultant argued that the appellant fulfilled the requirements of Rule 16 by permanently closing the factory, intimating the department, and surrendering the certificate, making them eligible for abetment.

Issue 2: Interpretation of Rule 16
The Ld. AR opposed the appellant's claim, contending that the factory closure and surrender were not timely as per Rule 16, which necessitates immediate intimation and surrender upon closure. However, the appellant's actions aligned with the rule's spirit as they ceased operations promptly after the ban announcement, informed the authorities, and did not seek to resume production. The Tribunal noted the ban's public nature, the appellant's compliance with sealing instructions, and the non-resumption of operations, concluding that the appellant met Rule 16's conditions and deserved abetment for the duty paid during the closure period.

Conclusion
The Tribunal set aside the impugned order, allowing the appeal and granting consequential relief, if any. The judgment emphasized the importance of compliance with statutory rules and timely communication with authorities in cases of factory closure due to external factors like government bans. The decision reaffirmed the principle that adherence to legal requirements, even in challenging circumstances, can lead to favorable outcomes for appellants seeking relief from excess duty payments during closure periods.